Important Terms for this Lesson:
• Consideration - that which is given or received in a contract
• Gift - the transfer of ownership without receiving anything in return
• Donor - the person giving a gift • Donee - the person receiving a gift
• Forbearance - a promise to not do something • Promisor - the person who promises an action or forbearance
• Promisee - the person to whom a promise is made
• output contract - a contract in which a buyer agrees to purchase all of a particular producer’s production
• requirements contract - a contract in which a seller agrees to supply all of the needs of a particular buyer
• liquidated debt - a debt which both parties agree exists and both parties agree on the amount of the debt
• accord and satisfaction - parties’ agreement can’t change the obligation required by their original contract and the performance of the new obligation
• release - settling a claim at the time the tort occurs, while the liability is unliquidated because the extent of damages is uncertain
• composition of creditors - a settlement in which the creditors mutually agree to accept less than they are entitled to in full satisfaction of their claims while the debtor agrees not to file for bankruptcy
•illusory promise - a promise that courts will not enforce
Q: What are three requirements of consideration?
A: Three requirements of consideration are (1) each party must make a promise, perform an act, or forbear, (2) each party’s promise, act, or forbearance must be in exchange for a return promise, at, or forbearance by the other party, and (3) what each party exchanges must have legal value (be worth something in the eyes of the law).
Q: Who is the person who makes a gift?
A: The person who makes the gift is the donor.
Q: How can legal value be found in the exchange of benefit for a detriment?
A: With legal value, the detriment is the giving up of a legal right. A detriment arises when a person promises forbearance.
Q: What is adequacy of consideration?
A: Adequacy refers to the values that different people place on similar property, which can vary widely. What one person will pay for an item or service, another person may feel is unreasonable and never consider paying.
Q: Why is consideration not binding in illusory contracts?
A: The promise is not binding because it is in essence a sham paraphrased by "I will if I want to."
Q: What distinguishes a gift from a valid contract?
A: Only a completed gift (shown by intent, delivery, and acceptance of the subject matter) is legally enforceable. A stated intent to make a gift, standing alone, is not enforceable. A valid contract, however, is enforceable because consideration supports the contractual promise.
Q: What is an output contract?
A: An output contract exists when a buyer agrees to purchase all of a particular producer’s production.
Q: What is liquidated debt?
A: Liquidated debt is a debt which both parties agree exists and both parties agree on the amount of the debt.
SCARCITY AND VALUE Scarcity of needed goods has always led to an increase in value. Scarcity will lead to the formation of black markets that traffic in the needed goods to be sold at the highest price in countries that have planed economies. Give two examples of situations where prices are much higher due to demand and the circumstances. For example, Super Bowl tickets sell for a much higher price than the dollar value printed on the ticket due to demand.
Important Terms for this Lesson:
• Consideration - that which is given or received in a contract
• Gift - the transfer of ownership without receiving anything in return
• Donor - the person giving a gift • Donee - the person receiving a gift
• Forbearance - a promise to not do something • Promisor - the person who promises an action or forbearance
• Promisee - the person to whom a promise is made
• output contract - a contract in which a buyer agrees to purchase all of a particular producer’s production
• requirements contract - a contract in which a seller agrees to supply all of the needs of a particular buyer
• liquidated debt - a debt which both parties agree exists and both parties agree on the amount of the debt
• accord and satisfaction - parties’ agreement can’t change the obligation required by their original contract and the performance of the new obligation
• release - settling a claim at the time the tort occurs, while the liability is unliquidated because the extent of damages is uncertain
• composition of creditors - a settlement in which the creditors mutually agree to accept less than they are entitled to in full satisfaction of their claims while the debtor agrees not to file for bankruptcy
•illusory promise - a promise that courts will not enforce
Q: What are three requirements of consideration?
A: Three requirements of consideration are (1) each party must make a promise, perform an act, or forbear, (2) each party’s promise, act, or forbearance must be in exchange for a return promise, at, or forbearance by the other party, and (3) what each party exchanges must have legal value (be worth something in the eyes of the law).
Q: Who is the person who makes a gift?
A: The person who makes the gift is the donor.
Q: How can legal value be found in the exchange of benefit for a detriment?
A: With legal value, the detriment is the giving up of a legal right. A detriment arises when a person promises forbearance.
Q: What is adequacy of consideration?
A: Adequacy refers to the values that different people place on similar property, which can vary widely. What one person will pay for an item or service, another person may feel is unreasonable and never consider paying.
Q: Why is consideration not binding in illusory contracts?
A: The promise is not binding because it is in essence a sham paraphrased by "I will if I want to."
Q: What distinguishes a gift from a valid contract?
A: Only a completed gift (shown by intent, delivery, and acceptance of the subject matter) is legally enforceable. A stated intent to make a gift, standing alone, is not enforceable. A valid contract, however, is enforceable because consideration supports the contractual promise.
Q: What is an output contract?
A: An output contract exists when a buyer agrees to purchase all of a particular producer’s production.
Q: What is liquidated debt?
A: Liquidated debt is a debt which both parties agree exists and both parties agree on the amount of the debt.
SCARCITY AND VALUE Scarcity of needed goods has always led to an increase in value. Scarcity will lead to the formation of black markets that traffic in the needed goods to be sold at the highest price in countries that have planed economies. Give two examples of situations where prices are much higher due to demand and the circumstances. For example, Super Bowl tickets sell for a much higher price than the dollar value printed on the ticket due to demand.